NITI Aayog to introduce model law on land leasing

NEW DELHI: NITI Aayog, the government’s premier think-tank, is set to introduce a model law on land lease that will not only improve agricultural efficiency but also quicken the pace of industrialisation.

The model law will offer flexibility to land owners and tenants to decide on the term of lease and rent, thus making it simpler for the government to lease land for public-private partnership projects in sectors other than agriculture, a senior government official told ET.

It will also open up avenues to the provision of land for industrialisation, which is fully within the state’s jurisdiction, and allow the landowner to retain ownership of land, a significant step after the Land Acquisition Act of 2013 that got stuck in Parliament, leaving states in a dizzy over how to proceed with their industrialisation plans.“The idea is to simplify procedures for government to take land on long-term lease while the landowners keep ownership of land, earn an assured return and retain the option to renegotiate the terms once the initial terms of the lease expires,” said the official quoted above.

The draft model Act, which is expected to be put up for stakeholder comments this week, may also allow automatic renewal of agreement on the expiry of lease period while simplifying the procedure for lease termination within the agreement period.

It may also help tenants secure short-term credit and other services on the basis of a simpler lease agreement. The existing tenancy laws, most of which are decades old, allow transfer of ownership rights to the tenant while either prohibiting or heavily discouraging leasing and sub-leasing of land.

According to the official, the Centre and state governments will now be able to implement their policies efficiently in the presence of transparent land leasing law.

The Aayog had set up an expert committee in September last year under T Haque, the former chairman of the Commission for Agricultural Costs and Prices, to prepare a model agricultural land leasing law in consultation with states, keeping in view the need to legalise and liberalise land leasing for much-needed agricultural efficiency, equity, occupational diversification and rapid rural transformation.

The draft law is based on the recommendations of the committee. In July last year, Arvind Panagariya, vice-chairman of the Aayog, had in a blog urged states to liberalise their land use policy to facilitate industrialisation, a move that he said would be a win-win for landowners as well as tenants.“

In the context of the difficulties in land acquisition under the 2013 land acquisition law, states wishing to facilitate industrialisation can further benefit from liberal land leasing if they simultaneously liberalise the use of agricultural land for non-agricultural purposes,”he had said.

Currently, the Goods and Services Tax (GST) is levied at 12 per cent on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.